Most entrepreneurs are familiar with ABC’s hit show, Shark Tank, which first premiered on April 2009. On the show, there are a panel of angel investors (Sharks) who screen entrepreneurs seeking capital for their product or business idea. Some of these entrepreneurs secure funding and are successful. Notable examples include Daisy Cakes, CitiKitty Inc, Readerest, etc. However, many do not secure funding and are not successful. Then, there are those companies who may not end up securing funding on the show, but because of the publicity, are able to turn their failure around into product orders or capital from other angel investors.
A great example of this is Megan Cummins, the founder of You Smell Soap. Although Megan was offered a deal on Shark Tank, she never received the promised capital because, after a period of due diligence, Canadian software mogul Robert Herjavec, decided to end negations. Reportedly, Herjavec “didn’t know [they] were a startup and had no sales.”
Despite this rejection, the publicity that You Smell Soap received from the 5.9 million viewer show led to product orders from several national retailers and fans. Without seed funding, Cummins struggled to gather the appropriate resources to meet the market demand. This scenario leads to my proposal for Shark Tank 2.0.
Once equity crowdfunding is put into effect (JOBS Act), entrepreneurs that appear on Shark Tank and do not receive funding from the Sharks will have the opportunity to raise the necessary funds from the 5.9 million fans via equity crowdfunding portals. This is similar to the voting system of American Idol. Then, hard working and driven business minds like Megan Cummins will have a second chance to jumpstart their startup business.
Equity crowdfunding will change the landscape in terms of how early stage businesses respond to media attention. Hopefully, amateur investors will back businesses that design products they themselves would love to use. Not only would these startups receive capital, but also have customer evangelists that want to see the businesses succeed because they love the people and the product.
